Apres Le Deluge, What?

May 2, 2005

Après moi, le deluge, literally "after me, the flood," the French phrase is attributed either to King Louis the XV or to his mistress, Madame Pompadour. And to those who expect the bubbles to burst with a giant pop, there is reason to suppose that this famous phrase may be relevant once again as a descriptor of the future. It doesn't take a lot of gold to weight you down, and those 100-ounce silver bars are mighty good paper weights.

Seriously, without Greenspan around to keep using increased debt of one kind or another to bail out the last screwup, who will be able to stem the deluge, and how? The goldbugs may have the resource to stay afloat in the deluge, but how will the infrastructure continue to function in the confusion that is likely to accompany an economic collapse?

Whatever one thinks of Jefferson, whatever one thinks of Jefferson, whatever one thinks of Hamilton, whatever one thinks of Adam Smith, whatever one thinks of Keynes, at least it is possible to operate an economy for a decade or two based on a consensus that revolves around a reasonable straightforward economic philosophy. But what if no one is left around which a consensus can form? What if the last nail has been driven in the last economist, and there is not enough support for the Rothbart-Hayek-Mises company to enable a system to be put in place in a timely way? After all, this last group demands understanding of a system-not a superficial grasp of a few elementary ideas promoted by a few politicians, but a deeper appreciation for how things are interrelated, and a willingness to think about the individual and the collective in the same framework.

ACHIEVING AGREEMENT AIN'T EASY. The citizen can often see that political bodies have problems reaching agreement. But probably there is not much awareness that research has been done with groups showing that even when groups are very motivated to reach agreement, the likelihood is very high that they will NOT under the normal type of group interaction. Data with groups has demonstrated very clearly that there exists a phenomenon (I'll call it a "thing" for short) called SPREADTHINK which is inherent in groups. The nature of this thing is that everybody has a different belief as to which of the component problems in a difficult situation is most important, and there is seldom a majority view of what should be tackled first.

There are published lots of data to show that the ONLY clearly demonstrated way (so far) to reach agreement on the sequence in which the issues should be tackled is to provide computer help to the group to discover the logic relationships among the component problems, so they can see which ones are more fundamental in aggravating which others. Once this is done, there is a clear picture of why some are more important than others in moving ahead-the evidence is published for all to see in many situations. But the economists don't know it is there or haven't bothered to look for it.

As time has passed and it has become more clear that le deluge might be a possibility, I have contacted various economists to try to get them interested, but alas-they are still stuck in the one-man, one-prize, mode of thought. This is a behavioral issue.

There is one prominent economist who will be nameless here who has taken on the brotherhood in a book. I thought to myself-here is one who may be interested. I contacted him-same result.

There is another who retired from government-a real curmudgeon. I thought to myself, here is one who might read one of my books and exercise his name recognition to take some favorable action. I wrote to him. He responded very positively. Send me the book, he said. I sent it to him with the bill for $40. He kept the book, but did not send the check. As far as I know, he used the book to warm his feet in one of those cold New England evenings.

So is anyone doing anything with the process that I have described? The answer is that some people are. As you might suppose, they are mostly in the far east. They are translating my books, they are teaching the processes. You might even say they are preparing for the deluge. I just hope that if they are they will be kind to those who have been financing their activity for these many years out of the savings that we used to have before we became a debt-driven economy.

China is poised to become world's biggest gold consumer.